As the trade agenda of the second Trump administration is being sorted out, automakers are getting an idea of what to expect for the impact new tariffs will have on their earnings. In its updated guidance for 2025, GM expects a hit of as much as $4-5 billion due to tariffs.
GM still expects to have a profitable year, but less so than previously anticipated. The Detroit automaker’s original expectation for EBIT (Earnings Before Interest and Taxes) in 2025 was $13.7-15.7 billion, and it’s been knocked down to $10.0-12.5 billion.
This adjustment factors in executive action that was taken on April 29th, which offsets tariffs based on domestic production and eliminates the risk of tariff stacking. According to the White House’s plan finalized last week, automakers will be reimbursed for such tariffs already paid since the 25 percent car tariff went into effect earlier this month. They’ll also be reimbursed for imported parts up to an amount equal to 3.75 percent of the value of a U.S.-made car. This reimbursement will fall to 2.5 percent next year and be phased out in the third year. The idea is to give automakers the time they need to increase domestic manufacturing and parts sourcing.
“We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest even more in the U.S. economy,” GM CEO Mary Barra said of the news, according to CNBC.
The adjusted guidance also factors in GM’s expectation to offset at least 30 percent of its tariff exposure. GM expects to achieve this through increasing U.S. production, like building more trucks at the Fort Wayne plant in Indiana by a factor of 20 percent, optimizing inventories, and reworking its supply chains to use more U.S.-sourced components.
At the same time, GM expects pricing to be more or less flat for 2025, increasing by 0.5-1 percent year over year. Remaining profitable while keeping pricing flat gives some credence to UAW president Shawn Fain’s belief that automakers can absorb tariff costs without passing them on to buyers.
Comments
They’ve wasted WAY more than that on the EV debacle.
GM EVs are now just behind Tesla and Bolt will help. BEV3, formerly Ultium, is an efficient platform and doing great for Honda Prologue. Cadillac needs a direction and could take Tesla market share.
I don’t quite get why GM is using a China only platform to make Buick EVs more competitive? I read about Ultium 2, maybe that’s what’s being used? They are definitely beautiful cars and the styling should come here.
If they didn’t source so many of their volume products from Mexico, China, and Korea they would not have this problem
GM followed Trump USMCA and 2018 S Korea trade deal so aren’t in the wrong. GM only imports Envision from China.
S Korea is legacy once important to Holden and Opel operations when GM was more globally successful.
Even now, GM should be taking both Cadillac and Buick to Europe. Mexico and S Korea have free trade deals with most of the world.
Profits? When all of these tariffs finally kick in, do they expect to sell much of anything? They’ll be bleeding red ink faster than you can say “oh, oh”.
GM is still positioned like a global company, like it was in 2011, but with China buying domestic only the Americans will buy GM cars.
GM needs to grow and should be using S Korea for export to Europe. Buick has a beautiful and high quality line up able to compete with Peugeot, VW, Renault, Ford. Unfortunately, Chevrolet left Europe on a sour note but Buick is a clean slate w/GM’s nicest cars. The new Chinese EVs would do
well, too
Why must a OIL COMPANY constantly chime in with a negative comment. 1. EV sales are up year after year month after month. 2 you can stop it . Chargepoint, EVGO and others have had record charge profits. 3. GM electric car program is doing great and selling more every month and sales are getting stronger. Why not go back to Horses and Carriages like they told Henry ford to do. They used to constantly bash Henery ford and say a car will never do the work for a horse. My one comment is GM is being a little stubborn with there policy’s like people are with sticking with ICE cars. Let people chose and if they want Carplay let them have it.
I’m okay with people buying EVs. I just need them to be okay with me buying ICE vehicles.
Why oh why would someone buy a vehicle that cost more than a regular vehicle. That was restricted in weather and travel. With absolutely no savings and so poor of resale value that the company’s have to buy them back themselves. It borders beyond the lunatic fringe. If GM doesn’t change, eventually it’s stock is going to take an irreversible hit and it want be relevant to tariffs.
You are right. GM should have created a transition period with HYBRID vehicules instead of jumping from GAS vehicle to directly ELECTRIC vehicule. You do not jump from a Cadillac to a Chevette. You will be very miserable.
HERE IS A GREAT IDEA MAKE AMERICAN CAR IN AMERICA
Hey GM—maybe ya shoulda kept making cars in America !! Your corporate fathers when they formed the company are rolling over in their graves.